Double or Nothing

As his reign drew to a close in the late 1970s, Shah Mohammad Reza Pahlavi had few allies. He had persecuted the Communists, thwarted the advocates of liberal democracy, antagonized conservative landholders, and provoked the religious conservatives. Having publically opposed or oppressed almost every group in Iran, the Shah sowed the seeds of his own destruction. When the Islamic revolution broke out, he had few but his remaining loyal soldiers to turn to.

Mahmoud Ahmadinejad seems unwittingly determined to follow the Shah’s path. Having arrayed the military, conservatives, Shiite clerics, and Supreme Leader Ayatollah Ali Khamenei against the reformist Green Movement in the aftermath of the disputed presidential election of 2009, he began his second term as president under immense pressure. If his term was unsuccessful, this coalition would undoubtedly regret its decisions—and without their support, his government might not last. Since the election, however, Ahmadinejad has provoked almost of all of these constituencies. His economic policies have driven up unemployment and caused rapid inflation, upsetting technocrats, economists, and the working poor. His cabinet appointees and domestic reforms have provoked sharp confrontations with the parliament. Most audaciously, he has publicly defied the will of the Supreme Leader himself on numerous occasions. Is Ahmadinejad sowing the seeds of his own destruction, or does he have the clout to survive until the end of his term in 2013?

Iran’s debilitated economy—marred by inflation, unemployment, and low growth rates—has been severely strained under Ahmadinejad, whose ungainly combination of populist economics and cronyism has led to inefficient allocation of oil revenues, unsustainable state subsidies, and the highest budget deficit since the Islamic Revolution. Real GDP growth has declined every year since Ahmadinejad took office, reaching a new low of 1.5 percent in 2009. Inflation, driven by the government’s swelling deficit, this year reached about 20 percent, while unemployment is currently around 24 percent. This is partially due to Ahmadinejad’s policy of tying minimum wage to increases in consumer prices while mandating that interest rates remain below inflation, artificially incentivizing investment in projects centered on capital, rather than labor. Additionally, his continuation of a longstanding policy of pegging the exchange rate of the currency, the rial, to the dollar has driven up imports and crippled domestic manufacturers.

This economic mess has provoked the ire of numerous leading Iranian economists, who have publicly condemned the regime’s policies as inconsistent and weak. On the other hand, Ahmadinejad’s recent moves to reduce subsidies on energy and food have imposed new burdens on the working poor and middle class, who have responded with protests. As over 70 percent of the government’s budget is paid for by oil exports, shrinking demand from China and Japan in 2010 (by 24 percent and 14 percent respectively) puts mounting pressure on the Ahmadinejad administration and exacerbates the country’s economic woes.

The Majles, Iran’s parliament, has taken notice of these policies; despite being dominated by conservatives, the parliament has gradually become a hotbed of opposition to his rule. Yet Ahmadinejad has repeatedly refused to sign many of its laws and complied with barely half of them as of early 2011. Led by pragmatic conservative Speaker Ali Larijani, the Majles has conducted aggressive inquiries into the affairs of the administration: questioning the competence and qualifications of Ahmadinejad’s ministers, obstructing his legislation, and threatening him with impeachment. Its impeachment of the Minister of Transportation this February was perceived as a targeted blow to Ahmadinejad, who denounced the parliament’s move as illegal and has attempted to circumvent it. Particularly jarring is that Larijani and his fellow conservative members of parliament vocally backed the post-election crackdown in 2009; this previous loyalty has, in the face of repeated provocation, been abandoned in favor of open confrontation.

Most daringly, Ahmadinejad has provoked the Supreme Leader Khamenei with aggressive claims on independent jurisdiction over a variety of political appointments. Ahmadinejad’s decision to dismiss Foreign Minister Manouchehr Mottaki during his diplomatic mission to Senegal in late 2010 surprised the Iranian political establishment, due to his apparent disregard for the Supreme Leader’s will. Khamenei had supported Mottaki’s appointment in 2005 and had
shown no sign of ceasing support. Ahmadinejad’s replacement for the post, Ali Akbar Salehi, spent just weeks in office before announcing this February that he would support Ahmadinejad’s efforts to establish a corps of special presidential envoys—diplomats independent of the Foreign Ministry whose appointment the Majles and the Supreme Leader had explicitly condemned shortly before.

This defiance over foreign policy appointments—anathema to even presidents as ideologically distant from the Supreme Leader as the reformist Mohammad Khatami—is but the latest of Ahmadinejad’s public confrontations with Khamenei over who should hold high office. Ahmadinejad’s initial appointee to the post of First Vice-President for his second term, his
son-in-law Esfandiar Rahim Mashaei, was publically rejected by the Supreme Leader and, despite Ahmadinejad’s ardent defense, compelled to resign. Unwilling to completely accept this defeat, he made Mashaei his Chief of Staff (a position free of the scrutiny of the government’s other branches) and fired Mashaei’s most vocal critic, the Khamenei-supported Intelligence Minister. Shortly afterward, Ahmadinejad added Saeed Mortazavi to his cabinet. Khamenei had dismissed Mortazavi, a former Tehran prosecutor, because of his brutal treatment of political prisoners after the 2009 election. No previous leader in the Islamic Republic has so often publically defied the Supreme Leader’s will. Ahmadinejad is playing a high-stakes game; the loss of Khamenei’s support can easily signify the end of his presidency.

Is the Ahmadinejad administration truly in danger? Some have argued that his most provocative actions, including Mottaki’s dismissal and the dramatic reduction of state subsidies on energy and food, are signs of renewed strength in the wake of the instability that followed the 2009 protests. Parliament’s overwhelming call for the execution of opposition leaders Mehdi Karroubi and Mir-Hossein Mousavi may suggest that attempts to revive the Green Movement, in the wake of the Arab democracy movements, have actually helped Ahmadinejad to reunite conservatives. Furthermore, the only recent act by the Green Movement, its “25 Bahman” protest, was considerably smaller than previous marches, a troubling indication that the opposition may be too afraid to replicate the far larger protests shaking the Arab world. Ahmadinejad’s unwavering ideological and financial support for the Revolutionary Guard Corps, through public works contracts and additional military responsibilities, may be sufficiently potent to cripple all sources of opposition short of the Supreme Leader. Nevertheless, whether Ahmadinejad remains in power until the end of his term will almost certainly depend, as it did with the Shah, on whether he can maintain allies beyond his ever-loyal security forces. As domestic discontent with Ahmadinejad rises, only one thing is certain: for the allies that secured him a second term, the stakes are now double or nothing.

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